Temporary labour migration “shambolic”

Cross-posted from The Conversation:

Australia’s 457 visa system is back in the news again. If you believe Labor, the 457 visa is a rort allowing foreign workers to steal Australian jobs. The government, on the other hand, defends it as a way for Australia to meet skills gaps in the economy.

Misunderstanding the problem is leading to wrong solutions

Failure to understand the problems with the current system is leading to bad policy. Minister Dutton announced changes to the 457 visa this week – reducing the time a 457 visa holder can remain in Australia after ceasing employment, from 90 days to 60 days.

This is completely the wrong reform –- it simultaneously increases the vulnerability of the 457 visa holder and the power of the employer. If the Coalition is serious about increasing job opportunities for local workers they will redesign the 457 visa properly to ensure it meets genuine skill shortages.

If a 457 visa holder comes in to fill a genuine skills gap and they either get dismissed or voluntarily lose their job, then it’s not a problem to have them looking for 90 days for a new job in that occupation where there is a genuine skills need in Australia.

As it is, 457 visa holders have such little job security. Dutton’s reform will only make them far more vulnerable to an exploitative employer.

We know what’s wrong with the 457 visa

National prosperity rises as a result of skilled labour migration, including through the 457 visa program. Numerous studies have shown this, most recently a report on migration released this month by the Committee for Economic Development of Australia.

But when we drill down into how the 457 visa works in practice, Labor does have a point when it claims that local workers are missing out on job opportunities. At present there is no proper mechanism for ensuring there is a skill shortage for the jobs in which employers are using 457 visas. This means employers can use 457 visas in areas where Australians are ready and able to be employed.

The mechanism for identifying who can apply for these visas is the Consolidated Sponsored Occupations List. This is a list that has no requirement that the occupation be in demand in the Australian labour market. It includes more than 600 occupations, most of which are not in shortage. So long as an employer nominates an overseas worker to perform a job on this list, then the occupation is deemed to be in need.

Nursing, teaching, engineering and law are all on this list, and are also occupations where Australian graduates are struggling to enter the labour market.

This means the 457 visa can be used by employers who wish to access foreign labour for an ulterior motive. While most decent employers will not do this, research shows there is a core group of employers that prefer temporary migrant workers because they are more compliant, work harder and are less likely to complain or be unionised.

This week industry groups and the federal government have pointed to an employer-conducted labour market testing requirement to show that employers have to prove job vacancies cannot be filled by Australian workers. This requirement was introduced in 2013 in the dying days of the Rudd government but was implemented by the subsequent Coalition government.

But all an employer has to do to prove they have tested the labour market is to put an advertisement on social media (Facebook will suffice) and if no-one answers it, they can use the 457 visa to access foreign workers. The advertising does not need to be paid and there are no proper checks and balances to ensure that employer-conducted labour market testing is properly occurring.

The answer is a more independent system

The Coalition government’s own expert inquiry into the 457 visa in 2014 produced a report which recommended the abolition of the current approach and its replacement with a new independent labour market testing model. This report, led by John Azarius, confirmed that this testing needs to be done independently of employers, drawing on international best practice and evidence from the OECD.

To achieve independent labour market testing, occupations should be compiled by an independent agency to ensure the list is regularly updated and reflects the changing skills profile of the economy. The occupational shortage list should account for regional nuances in labour supply. After all, an occupation which is in shortage in regional NSW may not be in shortage in Sydney city.

If an occupation is not on this list an employer should have to make the case that a shortage exists and conduct a genuine attempt at labour market testing before accessing a 457 visa worker.

Our immigration system needs the right reform

Our labour migration system is broken. Not only does the 457 visa have no proper mechanism to identify and target genuine skill shortages, but the international student visa and the backpacker visa amount to a backdoor guestworker program for low-skilled jobs. Many workers on these visas are being grossly exploited, as a litany of media exposés have shown, including this week’s investigation of migrant fruit pickers.

But the conversation needs to be respectful and responsible – it should be about protecting Australian access to job opportunities and protecting foreign workers from rampant exploitation. This is a problem of the government’s own making and the fault lies squarely at its door for the shambolic way it manages temporary labour migration.

Article by Joanna Howe, Senior Lecturer in Law, University of Adelaide

Unconventional Economist
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  1. ‘The need for an Australian Royal Commission into the Temporary and Tourist Visa racket’.

    Visa Category Work Rights Skill level Number

    Bridging Visa Full Unskilled 112,000

NZ Visa – nearly half not NZ born (back door) Full Mixed 650,000

Student Visa (Aug 2016 figure) Limited Unskilled 507,000

485 Temp Graduate Visa Limited Unskilled 23,000

457 Temp Skilled Visa Full Some skilled 196,000

Visitor with work rights Limited Unskilled 285,000

Working Holiday with work rights Limited Unskilled 163,000

Other Temporary Visas Limited Unskilled 36,000

Temporary Visa Sub Total =1,971,000

    Over Stayer No Unskilled 85,000
5% fraud of 8 million ‘tourist visas’ No Unskilled 400,000

Total Migrant Guestworkers onshore = 2,456,000

    When you add it up, we have 2.4 million migrant guest-workers here on temporary, illegal or tourist visas working here.
One in ten people living in Australia. One in five people in Sydney &
    Melbourne. 17% of the workforce, albeit many working illegally.

    Australians who are unemployed or seeking work (Roy Morgan August 2016) 2,400,000

  2. Dr Jeremy Samuat 
    Centre for independent studies 
    New welfare data examined. 

    The downstream economic impact of the temporary visa to permanent resident pathway.

    40% of our pensions are now paid to recently arrived foreign born elderly unskilled migrants.

    Widespread rorting by the Chinese, Indian & other migrant groups.  Massive billions of systemic fraud.


    We do not have a skilled migrant program of contributors that will assist in intergenerational change and be a future tax base.

    We actually have a massive intake of very old sick elderly unskilled third world migrants, now being dragged in through their usually unskilled also non contributing migrant ‘anchor’ – and they are all here for the free & unfunded welfare & health care.

    This is what the statistics show.

    We need a Royal Commission into the whole visa racket.

  3. The Department of immigration figures show we have over 1.97 million Temporary Resident Visa holders : international students doing sham 8 year old English or 14 year old high school ‘certificates’ with no international qualification)
    working holiday’, ‘NZ back door (nearly half non NZ born using NZ as a transit point)’, 457′ ‘bridging’, ‘special Visa’ etc

    Almost every one is working, the vast majority working illegally outside of limited work rights as many media reports confirm.

    Willingly! That’s why they are here.

    The vast majority are only here to work, routinely arrive heavily in debt to a loan from an offshore agent /procurer, fake funds, false or sham partners, fraud identity & health checks.

    They are here to repay that loan debt and to earn income for remittances back to their family.
    And longer term to gain a PR to bring in their extended family for Medicare or welfare.

    To these 1.9 million migrant guest-workers ~ we can add 85,000 overstayers, and 400,000 who enter to work illegally on Multiple reentry tourist visas (we have 8 million tourists a year of which around 5% or 400,000 work illegally, as recent ABC news & immigration checks show).

    When you add it up, we have 2.4 million migrant guest-workers here on temporary, illegal or tourist visas working here.

    One in ten living here.

    One in five in Sydney & Melbourne.

    ->The 457 category at 200,000 is only a fraction of the issue.

    92% of these 2.4 million migrant guest-workers are not 457 = and they are unskilled, very unskilled, many are not even literate in their own language.

    We have around 14 million working in Australia – so the low & unskilled migrant guest-worker ratio is 17% of the total workforce, albeit often illegal, underground illegal or vice work.

    They form (at an average of $45k income per migrant guestworker) a largely underground cash economy of $108 billion with little or no tax being paid.

    They only bring in at best $7 billion (Austrade 2015/2016).

    They remit back over $36 billion : (Austrac). The largest “foreign aid” contribution of any OEDC nation ~ mainly to offshore foreign criminal syndicates, agents and procurers in loan repayment or their third world families. (This exceeds the USA to Mexica outflow so topical in the recent USA Election).

    These 2.4 million migrant guest-workers occupy at least 400,000 EX Australian dwellings, mainly low end established ex Australian first home family dwellings in Sydney & Melbourne.

    98% of the 2.4 million migrant guest-workers live in these as private shared accommodation (DHIA 2015 Housing Use Study, SCC 2015 investigation into overcrowding & subletting) which is typically cash in hand sublet bunk & matress share, itself a $24 billion cash laundering & income evasion industry.

    The dwelling purchase is typically by a non resident Australian or a proxy, with a purchase, conversion & occupation rate of our lower end established Australian housing at 11 times the affordable housing construction rates.

    =>There is your key driver in the capital city housing bubble, rent affordability, indebtedness bubble & homelessness impacts for citizen & permanent resident Australians.

    We have 2.4 million Australian or Permanent residents unemployed or seeking work. Another $6 billion economic cost. (Roy Morgan v ABS).

    This means we have a 1 for 1 displacement of Australian jobs by unskilled temporary visa holders in direct, illegal or casualisation of employment. The impact has been lowered wages, loss of investment into our youth, blackmarket & growth of ‘labour service rackets’ and widespread corruption & fraud as well as active discrimination against hiring of Australians.

    The temporary Visa migrant intake and fraud in visitor visas is now a huge economic, financial & social burden.

    Once again : the 457 category is just a fraction (8%) & the least corrupt part of it all.

    We need a Royal Commission into the whole Temporary & tourist Visa racket.

  4. Underpaying workers eases employer margin compression so that higher commercial real estate prices (and rents) can be tolerated in Ponzi Australia.

    Mediocritas’ Rule #18:

    The price of bubble assets will rise into any space that’s made by cost-savings elsewhere.

    • Rule#18…ha ha love it. So if the real estate agent business is disrupted and the whole thing goes online giving huge cost savings to real estate speculators the whole industry will eat itself like a snake swallowing its tail

      • Yep, they’ll rapidly disappear and then Rule 18 suggests that once the useless middle-men are eliminated (ie, used-house salesmen), then the cost savings delivered to buyers will quickly be consumed by rising house prices.

        Bubble assets gotta bubble.

        Eventually we get an economy in which every imaginable efficiency has been realised, every possible cost-cutting measure delivered to enable high real estate prices and we’ve achieved Neo-Feudalism. A bunch of slaves serving the few land-owners (which will ultimately be only the Banks).

        Trade long: torches, pitchforks, rope and guillotines.

      • Trade long: torches, pitchforks, rope and guillotines.

        I would consider adding tumbrils to that list.

  5. ‘…..most decent employers don’t…”
    The authors of this report are much too optimistic. They remain decent employers until the indecent competition either forces them to become indecent or out of business. There is only one solution that works, kill the work visa system.

    • Yep. Slash 457 visas by 99% or put a $50k/year tax on each 457 visa.

      And deport the foreign “students” who cheated on exams to come here.

    • Or we could just fine the dodgy employers to oblivion and jail them. Also pay cash reward to any informants (locals or foreigners) that helped to lead to a conviction,

  6. Thankfully Gillard did not print 457 visas like crazy.

    Oh wait…she is was a massive liar. Vote 1 Pauline.

  7. We should leave carpenters on the skill shortage list, we’re going to need a lot of guillotines constructed to sort out Canberra.

  8. UE

    I agree with much of what you wrote but this;
    “The mechanism for identifying who can apply for these visas is the Consolidated Sponsored Occupations List. This is a list that has no requirement that the occupation be in demand in the Australian labour market. It includes more than 600 occupations, most of …”

    There is a need for 457 visa occupations to be on the CSOL with exceptions (example: very high salaries above the Fair Work High Income Threshold or FWHIT).

    NB: The author of this acronym has a sick sense of humour.

    However, Labour Market Testing (LMT) is a separate issue & it is on this front that the abuses occur.

    LMT is not required in a vast array of circumstances, mainly relating to Treaties, including WTO membership.

    That is there are exemptions based on passport, income (FWHIT), and other free trade agreements.

    This is the mechanism of the great loosening of requirements.